Cheney Free Press -

By JOHN McCALLUM
Managing Editor 

Looking at profit and loss

Report details financial implications of changes to Eastern Washington athletics

 

Last updated 3/5/2021 at 9:55am



CHENEY — When it comes to options on what to do about Eastern Washington University’s financially struggling athletic department, chances are last Friday’s long-awaited report by the PICTOR Group to the Board of Trustees didn’t really provide anything other than what was already discussed.

What it did provide was an outside look at the state of athletics at the university, its perceptions by the community and hard numbers on what those four options might mean going forward from individuals experienced with the ins and outs of NCAA sports.

Those options that examined are remaining at the Division 1/Football Championship Subdivision level and in the Big Sky Conference, dropping football and switching to a non-football playing Division 1 conference or dropping down to either Division 2 or Division 3. Each option carried its own pros and cons, but all seemed to have one thing in common — each required a level of institutional support in order to keep athletics in place.

“Only 25 schools in all NCAA had revenues exceeding expenses for that year (2019),” PICTOR Group specialist Paul Kowalcyzk – who has been an athletic director at three different universities – told the board. “All 25 were FBS (Football Bowl Subdivision) schools in Power 5 conferences. So if we’re talking profit and loss, all schools lost money.”

Without institutional support, and relying solely on sports generated revenue, those losses ranged from $2 million to $42 million in fiscal year 2019. The median — half of the schools above and half below — was $14.3 million, with EWU coming in at $13.4 million.

Staying put

Option A, as it’s billed, requires Eastern to fund all 14 of its “core sports” required to be in NCAA Division 1, including football. In currently doing this, EWU is at the median level for total athletics revenue, about $18.41 million, and athletics generated revenue, just over $4.9 million, in the conference but exceeding the Big Sky median of just over $12 million in institutional support at $13.5 million.

At the FCS national level, Eastern’s sports generated revenue exceeds the median of $4.775 million, but is well below the median for institutional support ($14.5 million) and overall athletics revenue ($19.925 million).

PICTOR Group vice president Carolyn Schlie Femovich, a former Patriot League commissioner for 17 years, presented three different approaches available to Eastern if it desires to remain in the Big Sky. The first is to reinvest in the athletics program from an institutional and fundraising standpoint in order to make the program whole and meet its needs.

The second is to create a hybrid model through full funding of the “high profile” sports at the current level and the rest at a base or minimum level. As an example, Schlie Femovich suggested funding football, men’s and women’s basketball, volleyball and another women’s sport at current levels and all of the other nine sports at a minimum level through reduced scholarship levels and/or reducing coaching staff numbers.

“They would still compete in the Big Sky, they would still be a Division 1 program, but perhaps their scheduling, their non-conference scheduling you would restrict them to maybe more regionally,” she said. “There are some options there. If you were to do something like that you might have the potential saving of up to $1 million in the hybrid model.

The third approach is to request a waiver from the NCAA on some of the requirements that must be met, such as number of scholarships or required contests in order to be a Division 1 institution. Schlie Femovich said this was new this year mainly because of situations many institutions were finding themselves in as a result of the COVID-19 pandemic, but would only be a temporary fix.

Mothball football

Option B would keep EWU in Division 1 sports but without its nationally-recognized football program. If it took this course, it would have to leave the Big Sky — and pay an exit fee between $250,000 – $2 million — and join one of two conferences: the West Coast Conference (WCC) or the Western Athletic Conference (WAC).

Eastern would need to be accepted into the conference it chose, and pay an entrance fee that would either be a set amount or a percentage of the equity it would have in the conference.

Schlie Femovich said the group felt acceptance into the WCC – home to Gonzaga – might not be desirable for the conference as they would be the only public school among private, faith-based institutions. The WAC almost might be difficult from a geographic standpoint as nine institutions span almost the entire western portion of the U.S. — creating major travel challenges.

Financially, Eastern would need to pick up another sport to replace football in order to maintain the Division 1 required 14. They would also be at a disadvantage when it comes to revenues since the WCC’s median total level of $26.5 million — which includes a median institutional support of $20.7 million — is more than twice Eastern’s total without football ($12.4 million).

“That’s not unexpected, because they’re privates,” Kowalcyzk said. “If you look at the WAC, the number is significantly larger as well, more than 50%.”

Schlie Femovich noted the WAC is also changing members frequently, creating instability in scheduling and related matters.

Dropping down

If Eastern elected to drop down to Division 2, it would have two regional conferences with which to choose from: the Great Northwest Athletic Conference (GNAC) and the Rocky Mountain Athletic Conference (RMAC).

The 10-member GNAC has institutions in four Northwest States and British Columbia, offering 17 men’s and women’s sports and include Central and Western Washington universities. Three schools — including CWU — play football, and the conference has an alliance with the Lone Star Conference to complete its gridiron schedule.

The 15-member RMAC has 21 men’ and women’s sports and 10 members currently playing football, but with 10 members in the state of Colorado, and the closest to Cheney being in Utah, like the WAC, geography once again becomes an issue.

Expenses for athletic programs are significantly lower in Division 2 overall, but so are revenues and even more importantly the opportunity to generate revenues is vastly decreased. It’s led to institutional support accounting for 82.4% and 86.3% of overall athletic budgets in the GNAC and RMAC, with deficits from generated revenues and expenses totaling $5.66 million and $4.9 million respectively.

Like the move to another conference, Eastern would need to pay the Big Sky exit fee and the new conference entrance fee while going through a 2-3 year reclassifying process. The biggest loss would be in NCAA shared revenues, going from $590 million in Division 1 to just $7 million in Division 2.

Even smaller

Finally, Option D would have EWU moving to Division 3 and into the nine-member Northwest Athletic Conference (NWC) where it would find itself being a public institution playing private universities such as Whitworth in Spokane.

“Very few institutions have considered this, particularly as going from Division 1 as a football-playing member down to Division 3, so the transition process could be a little bit more complicated than going to Division 2,” Schlie Femovich said.

The institutions in the NWC offer 20 men’s and women’s sports, with eight playing football. National revenue sharing is even less than Division 2 at $3 million with no scholarships offered.

Median total revenues of $4.74 million and expenses of $4.46 million are even smaller than Division 3, but again, so are sports generated revenues, which increases the need for institutional revenues. In 2019, the median institutional revenue for NCW schools was $4.17 million.

“They relied almost solely on university support,” Kowalcyzk said.

Like Division 2, Schlie Femovich said Eastern would need to be accepted into the conference and the division, along with paying entrance and exit fees in a process that would take 3-4 years.

“Historically, they average about four, including those coming up from NAIA or dropping down,” she added.

(Editor’s note: This article has presented a brief overview of the financial considerations with the options presented to Eastern Washington University regarding its Athletics Department. Next week we’ll look at the intangibles of athletics revealed by the PICTOR Group along with other aspects of athletics and its overall relationship with the university.)

John McCallum can be reached at jmac@cheneyfreepress.com.

 

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